Chris Hedges and Richard Wolff: Capitalism in Crisis

Austerity kills - poster

Image by Teacher Dude via Flickr

Dandelion Salad

with Chris Hedges and Richard D. Wolff

On Contact Archive on Apr 6, 2022

Originally from RT America on Jul 23, 2016

In this week’s episode of On Contact, Chris Hedges explores capitalism in crisis with Richard Wolff, professor of economics emeritus at the University of Massachusetts-Amherst. From Brexit, to labor protests in France, to Italy’s financial woes, they discuss the effects of austerity on the working class. RT Correspondent Anya Parampil looks at the fallout of Britain’s decision to leave the European Union.

From the archives:

Michael Hudson: Brexit, The TTIP, NATO and The US Military Industrial Complex

Brexit and the Derivatives Time Bomb by Ellen Brown

Richard Wolff: Class Warfare: French Labor Law, Brexit, and Greek Austerity

Why the British Said No to Europe by John Pilger

Michael Hudson: How Western Military Interventions Shaped the Brexit Vote

Noam Chomsky and Yanis Varoufakis: The Neoliberalism Assault on the World

11 thoughts on “Chris Hedges and Richard Wolff: Capitalism in Crisis

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  6. Excellent discussion. But there is a root cause at work here that everyone is missing and that was not even mentioned. Technology is the problem. Technology is what is causing capitalism to collapse as as social system.

    Technology is slowly, but steadily, displacing human labor, and as it’s displaced, we see the macroeconomic balance between labor and capital shifting away from labor, and towards capital. All around the world, the total labor share of income is falling while the capital share rises. Humans as working “machines” are being obsoleted and replaced with advancing forms of technology.

    There is much talk about rising technology unemployment, but that’s really a myth. Unemployment won’t rise. Wages fall instead. People must work to eat, so they find a new lower paying job to replace the one lost to technology. It’s not a lack of jobs that is the problem, it’s a lack of pay for labor.

    In the past, technology was limited and the best “machine” in the economy was a human worker. Natural resources were abundant and human labor scarce so standard supply and demand kept labor priced highly and capital resources (I include land in this use of “capital”) priced lower.

    In a labor based economy, anyone willing to work, could get a fair share of the GDP output of the system. And as GDP grew, the income of the average worker would grow. The capital side of the economy however was never a fair game. It was always a winner take all game where the few would win and the many would suffer. But when capital income was only 30% of the economy, only the rich played that game, the rest of society, just took their 70% of the GDP output and shared it based on labor effort.

    The capital side always was the mean and ugly side of capitalism, but as long as the labor side dominated, capitalism could succeed.

    But labor is failing now. Labor share of GDP is falling while capital share is rising. And as income shifts from labor to capital, the entire system becomes increasingly ugly as the game shifts from one of hard work, to get a share, to a back stabbing, hoarding, cheating system, of fighting over control of capital assets while the few win big, and many suffer.

    The labor share of down to around 50% range now (depending on how it’s measured– which is not easy or accurate). In the US, the labor share has been falling faster than the GDP has been rising, which means those in the lower 80% of society, that get most their income from labor, have seen declining wages. The real median household income in the US has been falling for 15 years. It peaked in 2000. The middle class, are in a 15 year recession, created by technology displacing human labor.

    Humans are losing the race against the machines, and there is nothing to be done to stop this. Wall street, and London, will win, the working man will lose. Labor income is the ladder to success for the poor, and the ladder is now shrinking, faster than the average worker can climb it.

    Advancing AI and robotics, and internet services will decimate what’s left of labor over the next 10 to 20 years.

    A Basic Income is the correct fix to this fall of labor income. We must tax the rising capital income, and give it back to the people, as a Basic Income. We must share the rising capital income, instead of allowing it to flow only to the 1%.

    We don’t even have to be careful about what part of income we tax. We can tax all income, to fund the Basic Income, both labor and capital. This is because when we use the tax to fund a Basic Income, we create an automatic labor shortage. The higher the tax, and the Basic Income, the less people are motivated to work. Which forces the economy to shift the labor capital split back towards labor. Wages will rise, profits and capital gains, and rents will fall as a result. So the capital side gets double taxed as a result, and the labor side get a tax refund, due to rising labor share. In fact, I argue we should tax as high as possible, to force the labor share to dominate the economy and drive the capital income down to insignificant levels.

    When we do this, we will have turned the economy back into a labor based economy — one where people are highly valued as workers — and where the capital share has become socialized, as a shared resource for humanity, as the Basic Income.

    The net result, is that the capital income value of our planet’s resources become shared, as well as as the man-made capital resources like the value of patents and trademarks and copyrights. But at the same time, we keep all the good parts of capitalism, such as the price system, which is critical to the efficient allocation of resources throughout the economy and the world. We keep the efficient production aspects of capitalism, while fixing the broken allocation of goods and services to the people.

    Advancing technology is, and always has been, the underlying root cause of the social collapse of capitalism, but the fix is technically simple — a Basic Income — which should be world wide eventually — for every human on the planet.

    Until we get the world focused on the true root cause of the problem, we can’t fix it. It’s not just capitalism as the root cause, but more simply, the loss of labor based capitalism, due to advancing technology.

    At least, this is how I see it.

    • Thanks for your commentary, Curt. You made some good points, but don’t forget that NAFTA and other trade agreements have pushed jobs off-shore for the last few decades, jobs that won’t be coming back.

    • I agree with you about the basic income, especially where often repetitive, prescriptive tasks can be better accomplished by automated or robotic systems leaving us free to pursue other activities that may be more creative and fulfilling; of course all machinery needs external energy, is subject to discretionary use and requires continual maintenance/upgrades.

      Personally I don’t think technology should determine our options, but serve our best interests. After all there is a world of difference between wanting to work, taking pride in one’s work and developing our skills, than having to accept any available task just to survive only to line someone else’s pockets.

      We should all have that choice.

  7. I want a blue-striped button-down oxford, too–there must be a closet-full in the RT green room.

    • Haha, that’s funny that both are wearing the same shirt. It’s a rather classic style shirt, so perhaps both happened to wear the same shirt, I don’t know. However, there must be something else to say about their conversation, surely?

  8. It’s complicated, & therefore very difficult to generalize. Our UK Left is now in total meltdown. Capitalism is fundamentally predatory, only not is the sense of a trophic cascade.

    Richard Wolff’s version of the British Isles is quite simplistic and does not accurately reflect the more attenuated subtleties. If the UK is hard enough to analyse, describe or understand properly, 27 other EU countries also have their own unique geographical and psycho-historic contexts. France is not Paris. This is not a simple crisis; some truths may be stated with confidence, but broad, sweeping assertions do not do it justice. It is inadequate to assume that US experience or approaches are comparable to an authentic Eurean consciousness.

    While the US, as a political entity, is of course not as historically diverse or culturally nuanced and linguistically fragmented as the EU, it does share many socio-political, linguistic & religio-cultural contexts ~ primarily rooted in the ‘conquest’ (or invasion) by Eurocentric colonial powers & centuries of immigration.

    The key differences are a more powerful & enduring, although suppressed, sense of American indigeneity & its massively significant (but still unacknowledged) ‘transcontinental’ biodiversity ~ as yet to be fully taken into account and properly articulated institutionally.

    The greater Americas are bounded by two vast oceans and axial poles. Europe is only comparable in this respect if we factor in the extensive & culturally critical continental regions of Eurasia, the Indian subcontinent & Africa. Our discourse must reflect these deeply embedded planetary facts. This is why the UN exists and was established after devastating world wars.

    The two most prominent contexts internationally that we must face are therefore New World indigenous relations, and Old World imperial zones of influence ~ witness the disruption in Turkey at present…wherever the ecology or educational ethos is broken, the ‘brokers’ tend to resort to violence and misogynist paranoia.

    Immigration played a key role in Brexit, but the sense of abandonment of many areas, still coping with stress-laden deprivations from post-industrial, post-(Reagan)Thatcherite policies, has also manifest as a revulsion with ECB & ‘Brussels’ bureaucratic rules (vis a vis fisheries, industry & agriculture for example;) and so multiple cliches have been invoked reflecting a deep mistrust and resentment of centralizing authority, as in the case of the City of London’s concentration of financial power & Westminster as the privileged seat of UK governance.

    Wolff is right when he emphasizes the systemic nature of the problem; but if we are going to talk systems, then we have to address the global biological deficit in ecological understanding that totally undermines the mass of spurious economic arguments buttressed by naive political dogmatism. Our greater global narrative has to address the core biospheric and inclusive inter-species crucial dilemmas we face everywhere. This is urgent.

    So why is it taking otherwise intelligent people so long to grasp this (metaphysical) nettle? The problem is the educated imagination. “It’s our eco-psychology, stupid. ” We have to be able to imagine the world coherently before we can function in it, or ‘as’ it, biophilically. Reality is mysterious.

    Universal life is sacred, unencompassed, evident & profoundly creative; not just (necessarily) ‘religiously’ defined nor ever instinctually restricted. We cannot defer to ostensible self-governance by ill-conceived, pre-conditioned methodologies, political reflexivity, ‘incorporated’ prejudice or through propaganda……the true Will and the Way are both emergent and unpredictable.

    Neither are possible without acceptance and affirmation from experience.

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